Analysis: China's nightmare

Beijing regards Taiwan as a renegade province and has threatened military intervention if the island takes steps towards independence.

In recent weeks China has unleashed a torrent of vitriol against Mr Chen's Democratic Progressive Party.

In the run-up to the polls, Prime Minister Zhu Rongji declared the Chinese were ready to "shed blood" to stop the island splitting away. And he warned Taiwan's voters ''to make the right choice...[or] they might not have the chance to regret it''.

But analysts say Beijing's sabre-rattling may have helped hand the presidency to the very candidate it did not want.

"We were not intimidated by Zhu Rongji,'' said You Ying-lung, a DPP campaign strategist. ''Taiwanese do not bend under threats."

Turning point

But it is not just the spectre of Taiwanese independence that alarms Beijing, it is also unnerved by the evidence of a maturing democracy.

The defeated nationalist KMT party has been in power since 1949, when its then leader Chiang Kai-shek was driven from mainland China by Communist forces. Its demise represents the first time a Chinese electorate has jettisoned its head of state through the ballot box.

Speaking after his victory, Mr Chen said his election would send a message to Chinese people everywhere that democracy was a sacred right. This is not a message likely to go down well in Beijing.

'One China'

Mr Chen's first test will be to assure Beijing that he is not planning to declare independence.

Although the DPP has traditionally favoured splitting from China, Mr Chen turned his back on this policy during the election campaign. He has said Taiwan will only declare independence if attacked.

Immediately after his victory, Mr Chen said he wished to make a ''journey of reconciliation'' to China to clear up ''misunderstandings''.

In a terse statement, Beijing declared it would never allow Taiwanese independence in any form.

And it said it was only prepared to negotiate with those who supported its ''One China'' principle: that is, that Taiwan is an inseparable part of the mainland.

Hong Kong precedent

Beijing has proposed ''a one country, two systems'' formula for reunification, like that adopted for Hong Kong and Macau when they were returned to China.

But Mr Chen, who has never endorsed the ''One China'' principle, was quick to reject the Hong Kong model after his election. However, Taiwan's new leader does have one selling point as far as Beijing is concerned - he has expressed interest in opening direct trade links with the mainland.

This is something China wants, but which Taiwan's KMT governments have always refused.

Analysts say it is an encouraging sign that Beijing has not immediately ruled out a meeting with Mr Chen, and appears to have adopted a ''wait and see'' attitude.

Watching Washington

The key now is whether China is prepared to put aside its pre-election rhetoric and take seriously Mr Chen's insistence he is not about to declare independence.

Beijing will be looking minutely at everything he says in the coming days.

It will also be watching for reaction from Washington, where Taiwan's burgeoning democracy has won it new friends.

When China fired ballistic missiles over Taiwan in 1996 in the run-up to its first democratic presidential election, the US sent 16 warships to the island - its biggest show of force in Asia since the Vietnam War.

Washington is currently considering the Taiwan Security Enhancement Act, which would boost ties with the island's military, as well as a request from Taipei for US weapons and destroyers.

Pressure

Although China did not fire any missiles in the run-up to this election, shows of military might have been a constant backdrop.

Chinese newspapers carried pictures of troops conducting amphibious landing exercises on the day of the elections.

And one paper published a poll which showed 95% would be ready to fight to stop Taiwanese independence.

Certainly the Communist leadership will be under popular pressure not to lose face over Taiwan.

But many analysts do not believe China has the capacity to carry out a full-scale invasion and any military tension could cause it massive economic losses.